Question

An insured has a stop-loss limit of $5,000 and an 80/20 coinsurance. The insured incurs $25,000 of covered losses. How much will the insured pay?

Answer 1

The insured will pay $5,000 as their stop-loss limit.

Step-by-step explanation:

In this case, the insured has a stop-loss limit of $5,000 and an 80/20 coinsurance. The stop-loss limit is the maximum amount that the insured will have to pay out of pocket. In this case, the insured has incurred $25,000 of covered losses. Since this amount exceeds the stop-loss limit, the insured will only have to pay the stop-loss limit amount, which is $5,000.